Independents Critical to Maximizing GOM, Global Offshore Production

Independent oil and gas producers remain critical to the Gulf of Mexico and other offshore oil and gas provinces worldwide in order to maximize production of resources, said John D. Schiller, Jr., founder and CEO of XXI Energy at the Offshore Technology Conference in Houston on Wednesday.

The different economics of different plays means that a range of companies should be pursuing offshore oil and gas, from majors to independents to small companies, Schiller said during a panel discussion of the role of independents in the U.S. offshore oil and gas industry.

Rising insurance and other costs due to increased regulations as well as regulatory uncertainty still pose challenges for independents in the deepwater Gulf. The industry is also frustrated with a sense of regulations being created on the fly and government agencies constantly watching operations, one panel member noted.

"We want to operate safely and we want government involved as a partner," said Ron Neal, co-founder and partner of Houston Energy.

Neal added that the workers from Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE) with whom he has dealt with are good people who are trying to do a good job; difficulty seems to come from higher levels.

Activity in the Gulf of Mexico is recovering from the moratorium imposed after the Deepwater Horizon incident in 2010 but has not reached levels previously seen.

John Larson, vice president of HIS Global Insight, raised the issue of whether permitting activity was an imperfect measure of activity, and if other data such as wells spudded and drilled were more accurate ways to measure activity.

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